Pound gains on news

The pound saw gains Tuesday as banks saw gains in equities markets and after Citigroup (NYSE: C) raised its recommendation on Lloyds Bank (LSE: LLOY) from “hold” to “buy”, as well as on continuing better sentiment from an earlier announcement from Barclays Bank (LSE: BARC; NYSE: BCS; TYO: 8642) that it will not need to raise more capital.

However, the pound gave back some of its gains after Prime Minister Gordon Brown said that the UK is entering a “deep recession”.

The US dollar and the yen, meanwhile, saw declines on the possibility that US government plans to buy bad bank assets through a so-called “bad bank” operated by the Federal Deposit Insurance Corp will improve the economic outlook.

If the plan is instituted, it could reduce demand for the dollar as a safer investment.

In late morning trade in New York, the dollar traded at $1.3217 to the euro and at $1.4294 to the pound, while the pound was up to 92.47 to the euro and the yen traded at ¥118.5831 to the euro and at ¥89.72 to the greenback.

Story link: Pound gains on news